HUN-2010-2-006

a) Hungary / b) Constitutional Court / c)  / d) 14-07-2010 / e) 142/2010 / f)  / g) Magyar Közlöny (Official Gazette), 2010/119 / h) .

Keywords of the Systematic Thesaurus:

03.10

General Principles - Certainty of the law.

Keywords of the alphabetical index:

Subsidy, agriculture / European Union.

Headnotes:

The Law on the Introduction and Operation of the Single Payment Scheme to Agriculture has a disadvantageous effect on agricultural growers who entered the market after 2006 or acquired new cultivation areas.

Summary:

I. On October 2008, the Hungarian Parliament adopted the Law on the Introduction and Operation of the Single Payment Scheme (hereinafter, the "SPS") for Agriculture.

In November 2008, the President of the Republic asked the Constitutional Court to review the legislation introducing the SPS. In the President's opinion, the reference point based around which subsidies would be paid would put farmers who started working their land at a later date at a disadvantage. The President did not regard the whole of the SPS as unconstitutional, and drew particular attention to the fact that the basic concept of the SPS for agriculture derives from EU Law, although the creation of a legal rule for such content does not stem from EU obligations, but rather from the free decisions of Parliament.

The Law on the Introduction and Operation of the SPS transforms the right to the utilisation of Community assistance for agricultural land into an independent property interest. The persons entitled to assistance under the legislation are those who were the users of agricultural land under any title and who requested a subsidy in 2006.

In the President's opinion, the introduction of 2006 as the point of reference contravened the requirement of legal certainty deriving from Article 2.1 of the Constitution.

II. The Constitutional Court held that the Law introducing the SPS infringes the principle of legal certainty. Legal certainty demands that land owners be able to form a clear view of the consequences when they lease their lands, enabling them to conclude the appropriate contracts. The Law does not comply with this requirement; none of its provisions offer protection of the interests of agricultural growers who entered the market after 2006. Under the Hungarian SPS model, the total national ceiling would comprise the so-called regional component (a flat-rate component of payment entitlements based on land use in the first year of SPS), the complementary national reserve (allocated on a historic basis, reference amounts of 2006) and the classical national reserve. However, the proportions of these are determined not by the Law itself, but by the minister in charge. The Constitutional Court found that the Law did not take into account the legitimate interests of those agricultural growers who entered the market after 2006.

Justice András Holló attached a dissenting opinion, in which he was joined by justices András Bragyova and Miklós Lévay. He pointed out that the constitutional requirement of legal certainty also comprises the principle of the protection of reliance and limits the intervention of the legislator in the formation of existing long-lasting legal relations. The Court emphasised in each of its decisions relating to that matter, that a constitutional border can be drawn between the freedom of activity of the legislator on the one hand and the interests of the addressees in the permanence or in change with adequate time for preparation. Both require protection and consideration must be given to the circumstances of each current case. The Court in its case-law only declared unconstitutionality when the principle of the protection of reliance had been breached and the legal regulation had caused damage. In the current case, the possibility of additional burdens for some agricultural growers was the sole basis for annulment. In Justice Holló's view, it was not sufficient to declare unconstitutional the relevant provision of the Law on introducing the SPS.

Justice László Kiss also attached a dissenting opinion, in which he was joined by Justice Miklós Lévay. Justice Kiss suggested that the Constitutional Court should have requested clarification from the European Court of Justice on a point of interpretation of Community law, specifically to determine whether the national law complied with it. The Constitutional Court did not do that, stating instead that the historical representative period could only refer to a given period in the past. He did not, therefore, feel able to agree with its finding of unconstitutionality.

Languages:

Hungarian.